Over the course of the pandemic, home values have skyrocketed — in some cases jumping by 30% over two years. Price appreciation is still growing, but now at a notably lower rate, according to a report published by homegenius, a Radian Group company, on Friday.
As of August, home price appreciation rose at an annualized 12% from the month prior, marking the second consecutive month of slowing growth, which mirrors pre-pandemic monthly rates, the report said.
The data vendor recorded an all-time high for monthly appreciation in June when home values grew by 18.8%. Two months later, the appreciation rate dropped by more than 35% from peak level.
The tempering of home price appreciation is a result of mortgage rates jumping and inflation, said Steve Gaenzler, SVP of products, data and analytics for homegenius, in a statement.
Interest rates recently shot up 41 basis points to an average of 6.7%, marking six consecutive weeks in which mortgage rates moved higher.
“It is once again clear that home prices are not impervious to the broader economic conditions around the country,” Gaenzler said. “However, the rate of appreciation is still well above the historical norm, at more than 12 % month-over-month. While it is likely that appreciation rates will continue to drop, homeowners’ equity remains at all-time highs and inventory remains tight.”
On a national scale, the median estimated home price rose to $338,692 in August, with homes across the country appreciating on average by more than $88,000 since the onset of the pandemic, thirty months ago, homegenius’ report said.
The report called this pace of growth “unsustainable” and noted that home values “should continue to revert towards normal, longer-term appreciation rates, although continued shortage of inventory and some regional outliers, should prolong higher than average national appreciation rates.”
All 20 of the largest metro areas in the country recorded slower annual price appreciation in August than in July. The largest decline was in San Francisco, dropping to just 1.3%, while Los Angeles recorded the second-slowest appreciation rate with a 5.7% increase month-over-month.
Mid Atlantic and Northeast markets were the strongest performers in August, while the West and South showed the strongest slowdown in appreciation, the reporter added.